Why Plumbing Companies Are One of the Best Businesses to Buy
If you’re looking to buy a plumbing business, you’re targeting one of the most recession-resistant industries in the United States. People will always need working pipes, functional water heaters, and someone to call at 2 AM when their basement floods.
Plumbing companies offer something most small businesses don’t: predictable, recurring revenue. Between residential service contracts, commercial maintenance agreements, and emergency calls that never stop coming, a well-run plumbing company generates consistent cash flow year after year.
Here’s what makes plumbing acquisitions especially attractive:
- Essential service — plumbing demand doesn’t disappear during recessions
- Recurring revenue — service contracts and maintenance agreements create predictable income
- High barriers to entry — licensing requirements limit competition
- Aging workforce — many owners are retiring, creating a buyer’s market
- Scalable operations — adding trucks and technicians directly increases revenue
The typical plumbing company acquisition ranges from $500,000 to $5 million, with businesses trading at 2.5x to 4x seller’s discretionary earnings (SDE). Companies with strong service contract books and commercial accounts tend to command the higher end of that range.
How SBA Loans Work for Plumbing Company Acquisitions
The SBA 7(a) loan program is the most common financing vehicle for buying a plumbing business. Here’s the typical structure:
- Loan amount: Up to $5 million
- Down payment: 10-20% of the total project cost (including working capital)
- Term: 10 years for business acquisitions (25 years if real estate is included)
- Interest rate: Prime + 1.75% to 2.75% (variable)
- Collateral: Business assets, personal guarantee, and any available real estate
What Makes Plumbing Companies Attractive to SBA Lenders
SBA lenders love plumbing companies — and for good reason. The industry checks every box that makes lenders comfortable:
Recurring revenue streams. Service contracts are gold to lenders. A plumbing company with 200+ active maintenance contracts represents predictable monthly income that doesn’t depend on new customer acquisition. Lenders view this recurring revenue as a strong indicator that the business can service debt.
Essential service classification. Plumbing is a need, not a want. Lenders know that even during economic downturns, people pay their plumber. This lowers the perceived risk of the loan.
Tangible asset base. Service vehicles, equipment, and inventory provide collateral value. A fleet of 10 well-maintained service vans has real resale value that gives lenders additional security.
Licensing creates moats. Because plumbers must be licensed — and those licensing requirements vary by state — there’s a natural barrier to entry that protects the business from fly-by-night competitors.
SBA Lender Requirements Specific to Plumbing Acquisitions
Not all lenders underwrite plumbing deals the same way. Here’s what most SBA lenders want to see:
- Relevant experience: You don’t necessarily need to be a master plumber, but you need management experience in a trades business or a plan to retain key licensed personnel
- Technician retention plan: Lenders want assurance that the workforce won’t leave after the sale — employment agreements or retention bonuses help
- License transfer or acquisition: You’ll need a clear plan for maintaining the company’s plumbing licenses post-acquisition
- Fleet condition: Lenders may discount the value of aging vehicles — expect scrutiny on fleet age and maintenance records
- Customer concentration: If more than 20% of revenue comes from a single customer, lenders will flag this as a risk
Due Diligence: What to Look For When Buying a Plumbing Business
Due diligence on a plumbing acquisition goes beyond reviewing tax returns. Here’s your checklist:
Revenue Quality
- Service contract book: How many active contracts? What’s the renewal rate? What’s the average contract value?
- Revenue mix: What percentage comes from residential vs. commercial? Emergency calls vs. scheduled maintenance vs. new construction?
- Seasonal patterns: While plumbing is less seasonal than HVAC, some markets see fluctuations — understand the pattern
- Customer concentration: Review the top 10 customers by revenue — no single customer should represent more than 10-15% of total revenue
Workforce and Licensing
- Master plumber licenses: Who holds them? Will those individuals stay post-acquisition?
- Journeyman and apprentice ratios: Are you in compliance with state requirements?
- Employee tenure: Long-tenured technicians signal a healthy culture — high turnover is a red flag
- Compensation benchmarking: Are technicians paid at, above, or below market? Underpaid teams leave after ownership changes
- Non-compete agreements: Does the seller have non-competes with key employees?
Fleet and Equipment
- Vehicle inventory: Age, mileage, condition, and remaining useful life of every service vehicle
- Specialized equipment: Camera inspection systems, hydro-jetting equipment, trenchless repair tools — are they owned or leased?
- Replacement schedule: What capital expenditures will you need in the first 2-3 years?
- GPS and dispatch systems: Modern routing and dispatch technology can significantly impact profitability
Financial Deep Dive
- Three years of tax returns and P&L statements
- Owner add-backs: Personal vehicles, family members on payroll, one-time expenses — these need careful verification
- Accounts receivable aging: How quickly do customers pay? Any bad debt patterns?
- Warranty obligations: Outstanding warranties on completed work represent future liability
Common Pitfalls When Buying a Plumbing Business
Buyers who don’t work with experienced advisors often stumble on these issues:
1. Overpaying for goodwill without contracts. A plumbing company’s “reputation” has value, but without documented service contracts, that goodwill can walk out the door. Make sure recurring revenue is contractually committed, not just habitual.
2. Ignoring the licensing transition. In many states, the company’s ability to operate depends on a specific individual’s master plumber license. If that person is the seller and they’re leaving, you have a problem. Plan the licensing transition before closing.
3. Underestimating fleet replacement costs. A fleet of vans with 150,000+ miles might still be running today, but you’ll be writing $40,000-$60,000 checks per vehicle within 12-18 months. Factor this into your offer price.
4. Losing key technicians. Your best technicians are the business. If three senior plumbers leave in the first 90 days, revenue drops immediately. Build retention into your acquisition plan — stay bonuses, equity participation, or guaranteed employment terms.
5. Skipping the customer concentration analysis. If 30% of revenue comes from one general contractor and that relationship was personal to the seller, you’re exposed. Diversified revenue is worth paying a premium for.
Typical Deal Structure for a Plumbing Company Acquisition
Here’s what a typical SBA-financed plumbing acquisition looks like:
Example: $1.5 million acquisition
- Purchase price: $1,500,000
- Working capital: $100,000
- Total project cost: $1,600,000
- Buyer equity injection (10%): $160,000
- SBA 7(a) loan: $1,440,000
- Term: 10 years
- Estimated monthly payment: ~$16,500
If the business generates $450,000 in SDE and you’re buying at 3.3x, this deal leaves healthy debt service coverage — exactly what lenders want to see.
How GoSBA Helps You Buy a Plumbing Business
At GoSBA Loans, we specialize in SBA financing for business acquisitions — including plumbing companies. Here’s what we bring to the table:
- 50+ lender network: We don’t work with one bank. We match your deal with the lender most likely to approve it — including lenders who specifically favor trades and home services businesses
- $320M+ funded in 2025: We’re not theorizing about what works. We close deals every week
- 100% free service: We’re compensated by the lender, not by you. Our advisory services cost you nothing
- Free business plans and financial projections: We prepare full SBA-compliant business plans and financial projections — a $2,500-$5,000 value — at no charge
- Industry expertise: We’ve financed dozens of trades business acquisitions and know exactly what lenders look for
Whether you’re a first-time buyer or an experienced operator adding another plumbing company to your portfolio, we’ll structure your deal, prepare your loan package, and get you to the closing table.
Ready to Buy a Plumbing Business?
If you’ve found a plumbing company you want to acquire — or you’re just starting your search — talk to us before you sign anything. We’ll help you understand what you can afford, how to structure the deal, and which lenders are the best fit.
Contact GoSBA Loans today for a free, no-obligation consultation. Let’s get your plumbing acquisition funded.
